Corn market awaits Nov. 8 reports

Darrell Good, an ag economist at the University of Illinois, says a rebound in corn prices is possible but not especially likely.

By Candace KrebsContributing Writer

Darrell Good, an ag economist at the University of Illinois, says a rebound in corn prices is possible but not especially likely.

“Anecdotal reports suggest that a relatively small portion of the 2013 crop was forward priced and that producers are choosing to store a large portion of the newly harvested crop. If that characterization is correct, there is a lot riding on the direction of corn prices over the next several months,” he says.

“In the very near term, the most important factor is the USDA's forecast of the size of the U.S. crop to be released on Nov. 8,” he added. “To move prices higher, that forecast would have to be smaller than current expectations that are near the September forecast of 13.843 billion bushels.”

Any reduction is more likely to come from fewer acres harvested rather than lower yields, he says. September forecasts predicted a national average of 155.3 bushels, and field reports so far seem to substantiate that, Good said.Another influential factor over the next several weeks will be the pace of exports and ethanol production.

Domestic production of ethanol was fairly constant in 2010 and 2011, but began to decline in the summer of 2012, based on a combination of stagnant consumption due to the E10 blend wall, increased imports, declining exports and a drawdown in inventories, he said.

There’s also speculation that the Environmental Protection Agency will roll back the biofuels mandate in 2014, which would further hurt grain demand, he adds.

One thing that could bring a boost to the corn market is if South America experiences production problems, Good said. The latest update on that situation will also be issued on Nov. 8, as part of USDA’s world supply and demand report.

As corn prices continue to trend downward, the value of all farm commodities is affected, which has led to concerns farmers will be squeezed by high production costs and lower profitability in the months ahead.

Daryll Ray, director of the Agricultural Policy Analysis Center at the University of Tennessee, is among the ag economists worried by that scenario.

“We are in for a series of years of very low prices,” he predicts. “We’re going to be seeing some very strenuous circumstances.”